General Motors Korea has been hit by another setback after the prosecution found some dubious cash flow in the automaker’s recruiting process. Investigators are looking into allegations that some executives and members of the labor union were bribed in exchange for hiring subcontract workers to full-time regular workers.

The new revelation came amid ongoing investigations into other corruption charges involved with its suppliers. 


The Incheon Prosecutor’s Office said earlier this week that it is tracking the bank accounts of some executives, who allegedly pocketed money during the hiring process. The prosecutors plan to summon the employees involved when the probe is completed.

Speculations have been circulating that some managers of the GM Korea labor union had let their children or relatives work as temporary workers for one to two years, and then shifted their positions to become regular employees. In return, top managers reportedly pocketed around 70 million won ($60,500) to 100 million won.

“The unfair practice appeared to have taken place mainly among production workers -- which belong to the labor union -- but not limited to them,” an official at the prosecutor’s office told The Korea Herald, hinting that the office workers may also be involved in the dubious hiring process.

GM Korea’s spokesperson declined to make any comments because the case is ongoing.

The prosecution’s investigation into the automaker is the latest in a series of charges the company has been involved this year.

Earlier this month, the former vice president of GM Korea was arrested for taking money in 2015 after unfairly supporting some companies that supply gifts to employees during national holidays or company events. Another executive, who was in charge of labor-management relations, was also arrested for a similar charge.

Last month, three labor union managers were also arrested or investigated for pocketing around 200 million won for similar charges from 2013 to 2015.

Market watchers said the series of allegations pour cold water on GM Korea, which is struggling to get out of the red after massive losses last year. The automaker, which posted a record operating loss of 594 billion won in 2015, had begun to see sales growth due to to the growing popularity of its mid-size sedan all-new Malibu and full-size car Impala. Its local market share grew to around nine percent recently.

“If such corruption charges continue to hit the brand reputation, the automaker will have hard time to grab double-digit market share despite the growing popularity of its new cars” said Kim Pil-soo, an automotive engineering professor at Daelim University.

By Shin Ji-hye (shinjh@heraldcorp.com)